Telefónica, the Spanish telecom giant, is well known for its Wayra accelerator program, introduced in 2011 and something of a European counterweight to Silicon Valley’s dominance. During these 10 years, he has supported some 800 start-ups which have generated more than 285 million euros in turnover and 10,000 highly qualified jobs.
But in the past two years, he has signaled a shift from his origins. He introduced Wayra Builder, a venture capital construction unit, designed to capitalize on Telefónica patents, technologies and ideas. The unit has created four startups so far, although Irene Gomez, director of open innovation at Telefónica, is reluctant to cite successes or financial results just yet, saying it’s “a bit too soon “.
Last September, he also created a new €250 million growth fund called Leadwind, in partnership with private venture capital firm K. The fund, which will lead investment rounds of up to €15 million. euros, focuses on deeptech scale-ups in Southern Europe and Latin America in sectors such as cybersecurity, industry 4.0, future of work, energy, e-health, fintech, l future of home and mobility.
Telefónica’s change comes as the innovation community increasingly questions the effectiveness of accelerator programs and labs. So Sifted felt compelled to ask Gomez: Does the company no longer have faith in the accelerator model?
“It’s not that we leave one pattern and start a new one,” Gomez says. “It’s a question of evolution.
While to a skeptic this may seem like a bit of a non-answer, Telefónica is still investing in its seven Wayra Hubs and has launched Wayra X, a 100% digital hub designed to move it further into B2C areas, which it defines as “mass”. markets”, focusing on areas such as 5G, e-health, digital education and home automation.
But, says Gomez, the innovation ecosystem has changed and Telefónica’s approach has had to change with it.
“It’s not that we leave one model and start a new one. It’s a matter of evolution.”
Ten years ago when he started Wayra, Gomez says, the ecosystem was still in its infancy and Telefónica found itself among the early investors in some very immature companies. But over the past decade, the ecosystem has evolved – and the startups with it.
“We’ve seen that the maturity of startups has evolved,” she says. “We have also identified that we are able to work with more mature startups and are also actively investing in this area.”
It is therefore not a question for Telefónica of abandoning the acceleration programs but of diversifying its operation with start-ups and entrepreneurs.
A means, not an end
Gomez, who took on the role of Chief Innovation Officer just over two years ago just as Telefónica was beginning to change the way it operates, wants to move away from the hype that has grown around the innovation – branding, funding announcements, investing, photo-calls, dizzying promises of new technologies and hopes of embarking on a future unicorn early.
Gomez adopts a more sanguine and pragmatic tone.
“The open innovation team is a means, not an end in itself,” she says. “We are a way to create diversity in the company, because diversity is a great way to make things happen differently.
“We are a bridge for cultural change by connecting two worlds, the world of business and that of entrepreneurship.”
Support (not only) at the top
One of the ways Gomez wants to build that bridge is to make sure there are connections between startups and society throughout the process. Often in innovation teams, the focus is on gaining buy-in from the top, because without the top executive, their innovation and cultural transformation are likely to fail.
There are just as many risks, however, in overreliance on the CEO.
“You need the CEO, but not just the CEO,” Gomez says. “You need other sponsors within the company where innovation can make a difference.
“Sponsors and promoters generate change within the company and they are essential to allow innovation from the outside world to be accepted.”
Gomez gives an example of where big tech companies and lesser-known startups compete for work.
Large tech companies often have established, multifaceted relationships with a company like Telefónica – they can be both existing partners and customers of the organization. When an RFP is issued seeking expertise to help solve a problem, there is often a risk that existing relationships supported by internal stakeholders such as account teams could crowd out the startup.
“Our investment is a way of signaling our confidence in the startup”
The added challenge for Telefónica is that when they invest in a startup, it comes with a commitment to help that startup do business and grow with Telefónica.
“It underscores the importance of having sponsor support within the business teams, not just the product teams,” Gomez says. “We don’t endorse every startup we come across, but the ones we invest in shouldn’t be considered higher risk than larger companies.
“Our investment is a way of signaling our confidence in the startup – it’s working with other clients, its roadmap is being delivered, we have a seat on its advisory board. We’re trying to give peace of mind and help a big business take a risk.
And we’re not talking small numbers here. Gomez cites more than 270 significant startups that have active business relationships within the Telefónica Group.
OKR at all levels
Measuring the effectiveness of innovation teams is always difficult, but Gomez has made establishing OKRs (objectives and key results) within his teams a key objective. It’s not just about making sure the team delivers value, it’s also about giving them permission to explore areas outside of Telefónica’s core business.
“We are looking for great investments with a VC mindset”
“You have to make sure everyone has OKRs and they’re associated,” she says. “Some are OKRs reserved for open innovation teams, and others are shared with business units to help create alignment and common ownership.”
Telefónica’s open innovation teams have four OKRs that serve as both benchmark and mandate.
- Revenue generation for Telefónica by working with startups — “We measure the value generated for the business by making these connections each year, and agree KPIs with business units to align with the operation”
- A financial return on our investments — “We want to see a return – we’re looking for good investments with a VC mindset.”
- Cultural change, indicated by the number of startups working with Telefónica — “Our goal is to have more and more startups working with Telefonica each year – we measure cultural change in terms of the number of effective connections [between the corporate and startups].”
- Future opportunities and technology bets beyond those specified by the company today — “There may not be a business unit that can work with the type of technology or product today, but we’re investing because we believe we need to bring these types of conversations to the business.”
Gomez points to areas such as the metaverse and decentralized networks, where his teams are exploring opportunities and investments that are both outside of the core business and without a need or defined problem within Telefónica’s business today. .
“They may not have a crisis today,” she said, “but why not in two or three years?”
Accept the risk, see beyond
Another novel idea is the “anti-portfolio”.
“Anti-portfolios are the companies in which we had the opportunity to invest, but declined for appropriate reasons,” Gomez explains. “But these were great investment opportunities nonetheless.”
These not only serve as a reminder of how easily short-term thinking can influence even the most established innovation functions, but are also ripe for revisiting without the pressure of obvious fit in the here and now. .
“The hustle and bustle of companies to get results can sometimes kill ideas that could have a longer-term positive impact,” Gomez says.
His biggest concern is that the company may be too focused on the needs of today, when as an open innovation unit, “we have to take risks and invest in the future, even if the company is not prepared today”.
“Corporate hustle and bustle for results can sometimes kill ideas that could have a longer-term positive impact.”
His personal challenge for 2022 will sound to many: “Getting the right balance between listening to known business needs and challenging them with things they don’t have in mind today.”
Thomas Brown is Sifted’s corporate innovation reporter and a freelance journalist, award-winning author and consultant specializing in digital transformation, innovation, organizational culture and consumer behavior. You’ll find him tweeting from @ThinkStuff.